Left: The Sacramento delta forms after many tributaries feed into one single water body in Silicon Valley. Similarly, social startups are combining with incumbent software into one suite (Wikipedia)

As an industry analyst, I’ve been waiting to write this post for a few years, it’s fascinating to see the Cambrian Explosion (a prehistoric era where millions of species rapidly emerged on the earth) now turn into consolidated suites, as the ever fragmented Social Business Stack (we found 18 classes of software and service) unmanageable for brands who seek less complexity. Finally, we’re starting to see the combination via partnership, as well as consolidation of platforms emerge.

[A Social Software Suite (SSS) is a consolidated set of social web applications across multiple use cases that share a common user interface and data interchange. The suite enables corporations to manage online relationships and activities with their internal and external customers]

In summary, the state of Social Software Suite (SSS) is immature. The the M&A is just happening across the industry and the integration stories have few proof points or customer case examples, we’re in a stage of infancy for social suites. While we’ve seen many social media proof points, hearing how social integrates into email, advertising, crm, support software, BI, CMS, and beyond is in it’s early stages. Without a doubt, we’re entering another era of the social space.

Consolidation a Natural Evolution, Sign of Maturity

Integration occurs after a Cambrian Explosion. When I show brands the social business stack of vendors, they often sigh, get frustrated, as they know they’re the ones that must integrate all the pieces together. They seek a common set of vendors to emerge that they don’t have to constantly coach on R&D and integration partners, and are waiting for maturity in products and consolidation so they have to analyze less vendors. Secondly, as social integrates with all other incumbent software, the need for suites to emerge are only underscored.

High Valuations Forces Biz Dev and M&A. The industry is feeling a domino effect. As a few acquisitions start happening, large software enterprise players know they need to make their bet on the table to get into this game, after initial innovation was done by startup vendors. With IBM, Adobe, Lithium, Salesforce making some of the early plays this has set off an arms race for other vendors to develop their integrated suite.

Facebooks IPO “Debacle” makes M&A more attractive. With Facebook’s IPO not going as well as financial analysts had hoped with initial valuations, the hopes of these startups to go IPO and succeed like 10 years ago have now shifted to M&A deals, where the exit is combining with a large player. The domino effect causes all investors, boards and executive teams to make their deals and moves before potential windows from suitors dries up. It’s dating season, and everyone wants to mate.

Brands Must Prepare Company, Yet Complexities Not Undone

Suites are Good for Brands Who Tire of Complexity: Brands are tired of dealing with hundreds of vendors, and having data and logins and systems spread across the space. They seek consolidation from their providers, as doing it themselves in a rapidly changing environment is complex, expensive, and frustrating. Expect brands to line up at the C level to embrace vendors that provide high level dashboards that provide real time reporting on these tools, and enable multiple business units to manage social use cases across the company.

Suites may Frustrate Brands Who Seek Best In Class: Don’t expect these suites to be a silver bullet to solve the needs of corporations. Point providers can innovate faster, work with an ecosystem of agencies and system integrators and maintain platform agility. M&A doesn’t promise integration will occur smoothly, esp as cultures and platforms are forced to marry in a rapid manner. Expect many pure play vendors to maintain their lead and stand the test of time –without being acquired

The Future is Integration of Paid, Owned, and Earned: Altimeter’s current research on the integration of Paid, Owned, and Earned (POE) has already found early indicators that brands, and their agency partners are seeking tools that interwork together, and as a result a new team within a corporation will emerge to lead this charge, agency partners will restructure and new software will emerge to make this come to life.

Ongoing List of Enterprise Class Social Software Suite (SSS) VendorsIf you’re like me (who’s full time job is to track this) this is a confusing space to track, as a result, I’ll keep this list updated for a few quarters, till it doesn’t make sense to manage this or it’s time for me to do a formal vendor rating and ranking. Disclosure: Your trust is important to us, as a result, we want to disclose many of these vendors are clients of Altimeter Group. Vendors are listed in alpha order.

Provider

Integration Points

Research Notes

Adobe

Ads, Targeting, Analytics, Social Media Management System, Social CMS

Adobe was the first to launch a nearly complete suite that spans the entire digital marketing push at their Summit conference. Although mainly marketing, they must bolster into customer support positioning beyond CQ5 this is a strong contender that already has an enterprise marketing footprint via creatives and now with Omniture.

Bazaarvoice

Ads (Media), Social integration in .com, analytics

Bazaarvoice recently acquired top competitor PowerReviews giving them a lock hold over ratings and reviews across the industry. Recently, the announced a media product that extends social ads beyond .com and even beyond FB and Twitter ads. They must expand to engagement software to cover the full span.

Google

Search marketing suite, social network, applications, social media management system (Wildfire) and analytics

Google’s strengths in search marketing has started to extend to Google+, although adoption numbers are a fraction of other social networks. Expect that Google Analytics combined with collecting of data from Google+ will impact search results in search engine results pages. Now with Wildfire, they can extend into the Facebook platform, as well as deploy Google ads in multiple locations, as well as tie to Google Analytics.

IBM

Analytics, Brand Monitoring, Targeting, CRM

A strong existing player that acquired Coremetrics, they have a strong background in analytics and intelligence, but need to develop an engagement solution that allows brands to engage in social while aggregating data back to their systems.

Lithium

Communities, Engagement software, brand monitoring

Traditionally a community vendor on support use case, they’ve acquired Scout Labs for brand listening and recently announced a white label engagement tool. They must quickly move into the marketing aspect beyond support and launch an advertising platform that converts earned content to paid.

Oracle

Social Media Management System (Vitrue), Social Analytics (Collective Intellect) CRM and now Involver

New entrant, they acquired Vitrue for an assumed $300m showing the promise of social data into existing CRM systems a reality. The roll-out isn’t quite clear for roadmap, I look forward to hearing more. (edit: now that they’ve acquired Collective Intellect, the pieces fit together: listening, engagement, analytics.

Salesforce

Brand Monitoring, CRM, Data.com, lightweight community products

Traditionally strong in sales and support use cases, Salesforce (edit: has purchased) BuddyMedia (who purchased ad platform Brighter Option) that would quickly extend them into a new arena, this fast mover is disruptive and is to watch.

Interesting point about Facebook’s IPO issues making M&A the preferred exit. Do you really put that much stock in them as a bellwether? Could it be that they and their underwriters just got greedy and botched it, rather than a symbol for a cooling IPO market overall? Linkedin is doing well. ExactTarget holding steady, too.

LinkedIn is really the only recent tech company that has held its valuation post IPO. However, I agree with the assessment that because valuations have dwindled from unfathomable to astronomical, I am not sure it makes sense to rule out IPO as a potential exit strategy.

Thanks for all the comments, I’d state that many of these companies were obviously in M&A discussions before the Facebook IPO, (as Oracle made buy just a few days around FB IPO) but now, startups are hesitant to focus on IPO as only form of exit.

Certainly, M&A is a more expeditious route. And, there has to be some IPO activity, otherwise nobody has the capital access to buy the new guys. Facebook bought Instagram with public market dollars (and shares). Same thing with Vitrue, and now with Buddy. The guys who are public buy the guys who aren’t. But if nobody goes public, it stifles the cycle and will crush valuations (and over the longer term, innovation?)

This has been a long time coming. I don’t think that social media marketing software was ever going to be a pure play. Instead, it needs to be tightly integrated into the organizational central nervous system.

Acquisition by an existing platform provider is the quickest, cleanest way to make this happen. Takes a lot of money and a lot of time to build the platform…

Facebook is not a bellweather but it does show the issues with the stock manipulations going on and with it not going crazy has put the valuation in more check. With BuddyMedia being acq by Salesforce the pressure is on for the little players to get lined up fast. This year will be a wash out and many zombies companies left.

I hate to say this, but the best way for brands to get aggregation combined with best in class is to hire an IT consultant who knows the space. It’s a great opportunity for the right consulting firm. Perhaps Deloitte, since they have Heuer?

Brian, rather than list all the products for each of these vendor (and the specific names are in flux) I listed the categories in which they had invested. For example under salesforce I listed they had “brand monitoring” which is Radian6. I agree, more detailed analysis is required, I may do this in formal quant and qual research report.

Or does it simply mean that less IPO’s and big money and the resulting big money winners will bring down some of the ‘pie in the sky’ valuations tech companies looking at M&A’s have come to expect? It seems that some of the numbers coming from VC’s and M&A’s recently are striking fear into the hearts of anyone who lived through 1999.

I think it is interesting what is happening (since this consolidation was to be expected in such a fragmented high value market). Though what I am most interested in is how the suites will manage to stay best in class, without becoming something that tries to be everything for everybody, and in the end become rather mediocre.

I wonder when the big suites will move towards an approach that allows more integration and extensibility with other suites or best in class software. Something that is already happening with salesforce using their app exchange (though still largely driven by their customers, not by their own efforts so the user experience is not always really great). Having some kind of app store might therefore become a necessity for the near future to combine best in class with a reduced complexity.

An interesting suite to add btw might be Jive, since they combine communities, monitoring, ideation and big data including an app store.

Jive has a lock hold on a few specific use cases and is very focused, but the other vendors listed here do much more.

Barry Fleming

Nice analysis and POV Jeremiah. I think that the recent M&A activities points to a certain tipping-point of maturity in terms of integrated technologies, but the real issue for the enterprise lies-in the governance issues surrounding social and all the various touch points and the “social stakeholders” within the organization. If anything, these primarily software shops need to partner with management consulting firms in order to effect the holistic change / paradigm shift necessary to maximize ROI. Either that, or they need to elevate their game beyond “sales engineering” and into organizational development and optimization.

Jeremiah,
We spent last 2 years testing new ERP solution with rich SCRM features for our company. From the big guys to the startups. Can’t believe we landed on the new version of ZoHo. It’s vast API and non-developer customization capabilities are letting us go to the next level of social for our company. It is working for us on all levels of the Customer Buying Journey – from internal stake holders to end customer. Loving it. Please consider on your list. I can give you deep dive analysis if you’d like. Please send a checklist or other you use to grade/consider contenders.